The effective use of digital technology enables students to confidently navigate tasks in daily life, work, and academia. The growing prevalence of generative Artificial Intelligence (AI) tools underscores the urgent need for higher education institutions to enhance students’ digital competence. This systematic review was conducted using the PRISMA method, 42 articles were selected from Scopus and Web of Science from 2019 to 2023, aiming to provide an overview of research trends on university students’ digital competence. Through thematic analysis, this study revealed four key research themes: digital competence evaluation, relationship studies, comparative studies, and strategies for improvement. The onion framework of digital competence that emerged from this study effectively illustrates the progression from core to specialized competencies. The authors advocate that targeted intervention strategies are essential to effectively improving students’ digital competence. It is recommended that universities embed digital competence into educational philosophy, adopt interdisciplinary approaches, and incorporate it into curriculum design to comprehensively enhance students’ digital competence and support their career development.